Posted
by
Soulskill
on Monday March 15, 2010 @02:47PM
from the better-than-illegal-alchemy dept.

CWmike writes "Nokia asked a federal judge last week to toss out Apple's antitrust claims, saying the iPhone maker indulged in 'legal alchemy' when it tried to divert attention from its infringement of Nokia's intellectual property. The filing was the latest salvo in a battle that began in October 2009 when handset maker Nokia sued Apple, saying the iPhone infringed on 10 of its patents, and that Apple was trying 'to get a free ride on the back of Nokia's innovation.' Apple countered in December with a lawsuit of its own that not only claimed Nokia infringed 13 of its patents, but that Nokia also violated antitrust law by legally attacking Apple after it declined to pay what it called 'exorbitant royalties' and refused to give Nokia access to iPhone patents. 'These non-patent counterclaims are designed to divert attention away from free-riding off of Nokia's intellectual property, a practice Apple evidently believes should only be of paramount concern when it is the alleged victim,' Nokia charged in the motion. Apple is on a legal roll, having also recently sued the maker of Google's Nexus One, HTC, for patent infringement."

After being screwed by Microsoft in the past, it's pretty obvious why Apple is so aggressive nowadays. It's taking taking some pages from Microsoft.

I am with Nokia because they're quite nice with Qt and they are definitely rightly responsible for a lot of technology that no doubt Apple just implemented without permission. I think the fact that about 40 firms* paying royalties is evidence enough.

I will not buy an iPhone and never will be part of that monopoly. iPods, iPhones are engineered to fail and you paying ~£30 for the privilege to do very little.

Now, someone else may have more recent information that contradicts this, but...

My understanding was that Apple tried to license these patents from Nokia. They are part of the GSM specification, which no GSM phone can function without. Because they are part of the standard, they must be licensed under Reasonable And Non-Discriminatory terms.

But Nokia wanted more from Apple for these patents than they did from anyone else.

What, exactly? I don't know. Either the articles I've read didn't say, or I've since forgotten. I think it was cross-licensing with some of the specific patents on the iPhone, but as I say, I'm not sure.

Either way, if Nokia isn't licensing the original patents under RAND terms to Apple, then they should be burned to hell and back for this. They knew the price when they put patents of theirs into the GSM spec, and now they have to live with it.

Apple has a rather unusual model to sell its phone: From what we've heard Apple demands not only a one-time sales price from the operators (as most other mobile manufacturers do) but also a part of the monthly fee paid by iphone-customers. If Nokia licenses its patents for a percentage of the sales price (a common practice) they could also have asked for a percentage of the monthly fee (and justly so, if you ask me, as Apple just spreads out the sales price over a longer period of time). Apple on the other side might object to being the only GSM-manufacturer that has to pay a monthly fee.

And Apple want to pay up - they just don;t want to pay more than other cellphone companies to use the GSM patents. Nokia is obliged (not by Apple) to licence those patents equally to anyone who wants them, not to strongarm anyone it chooses if it fancies some of the IP the company holds. Apple here is claiming that Nokia is unfairly leveraging its GSM patents (the standards) to get more in return than it should really be asking for (by the terms of its obligation to licence them).

Apple isn't trying to *not* pay - it just wants to pay what other cellphone makers pay.

No, they are asking (according to Apple) more than they are allowed to - Apple wants to pay what everyone else pays for the GSM patents. Nokia is obliged to charge them that rate. Apple claims Nokia is strongarming them unfairly to get access to other patents that Apple holds.

How is the hardware R&D any more valid than software R&D? I have a hard time figuring out this distinction. So far as I can tell, if you're against software patents, you're either against all patents, or you're a hypocrite.

In typical Slashdot form, I present a car analogy.Software patents are like patenting the idea of an engine (I put gas in and it makes the wheels turn). Once you've patented your software, no one else can make engines without your permission.Hardware patents are like patenting a specific kind of engine (I put gas in and it does this and that and the wheels turn). Other people can still make engines without paying you royalties as long as their engines don't work exactly the same way as your engine.

Another problem here is it says that when Apple counter sued for the 13 patents, they also admitted they are violating Nokia's patents because they didn't want to pay the royalty rates and cross-patent usage. Just because Apple didn't want to pay the rates and patent usages doesn't give them the legal right to use and profit from Nokia's work for free.

Actually, Apple didn't want to agree to Nokia's non-licensing of the patents. Apple is willing to pay, but Nokia doesn't want RAND license fees like everyone else wants to pay. Instead, Nokia wants Apple to pay more than everyone else. Apple wants to pay, Nokia doesn't want to accept the terms that Apple is paying under.

Apple knows of the patents - they have to pay as part of standard agreements, which is why they're all licensed under RAND (reasonable and non-discriminatory) principles. So they're willing to pay Nokia the same fees that every other cellphone maker pays them. Nokia, though, sees potential in what Apple is doing, and demands that they pay more simply because Apple has something Nokia wants, and Apple has no choice but to pay Nokia anyways.

In a car analogy, Nokia is selling engines for cars. Everyone who wants to build a car has to buy a Nokia engine, and they all pay $5,000 for it. Since Nokia is the only company that can sell engines, they agreed to sell anyone who makes cars an engine for $5,000 (RAND). Apple comes along, builds the iCar, and wants to buy the Nokia engine. Nokia sees that the iCar has a nifty dashboard widget, and wants that for their cars. So Nokia charges Apple not just $5,000, but $5,000 plus the dashboard widget.

That is often what software patents boil down to. Something interesting like a type of encryption/compression maybe should be patentable. This also relates to obviousness, many software patents are obvious... but patents are annoying to get. This results in big corporations which have people to deal with patents just patenting everything. Which slows progress.

Next is cost. If you think that patent laws are important to encourage innovation not to make random people rich then this is an issue. A patent for something created in a lab may cost many millions to get working. Think about the money sunk into creating better computer parts each year. In software however most of the patented things were created in a minutes to days.

And there is compatibility. In the carbon based world not too many things need to work together, maybe wipers with cars and lights in sockets. In the computer world there is an incredibly complicated interconnected ecosystem of crap. Winamp talks to messenger, web server, windows, certain games and so on.... and that is just one piece. The problem is that many patented technologies causes needless fragmentation which slows progress. Think of all the crap oss people have had to build not because they wanted a better system but because of legal barriers.

They are also unnecessary because software is so opaque. It is unlikely anyone is going to copy your software's patentable bits since it isn't available to them. So each time someone creates say ogg over mp3 they are actually creating it from scratch anyways, showing that what was patented was an idea. In all othercases of software ripping-off copyright will be more than sufficient, there is no need for two overlapping laws.

In the end all you need to ask is this: "Do software patents help or hinder a healthy programming environment?" Most people think not.

In a car analogy, Nokia is selling engines for cars. Everyone who wants to build a car has to buy a Nokia engine, and they all pay $5,000 for it. Since Nokia is the only company that can sell engines, they agreed to sell anyone who makes cars an engine for $5,000 (RAND). Apple comes along, builds the iCar, and wants to buy the Nokia engine. Nokia sees that the iCar has a nifty dashboard widget, and wants that for their cars. So Nokia charges Apple not just $5,000, but $5,000 plus the dashboard widget.

In this case, no one has clean hands nor is completely innocent.

Yes, but it's not just royalty rates involved in this case. Its patents and royalty rates. With your car analogy: Nokia is selling engines for cars, everyone who wants to build a car has to buy a Nokia engine up $5000 and offer up say $10000 worth of patents. Along comes Apple, a new comer to the field and wants to make the iCar with it's nifty dashboard widget. They only want to pay the $5000 everyone else pays but when it comes to the patent end, they only have $5000 worth of patents they can use, leaving a $5000 difference between what they want to pay and what everyone else is paying. (iPhone is only 3 years old so it's possible on that level). Now you have everyone paying a total of $5000 cash + $10000 patents value to make a total value of $15000. Apple offers only $5000 cash (like everyone else) + $5000 in patents = $10000, $5000 less then anyone else. That leaves Apple getting the unfair deal in their favor. Looking only at the cash value, yes that is horribly unfair of Nokia to want that extra $5000 from Apple, but it's only higher cash because the patent options lacked compared to what they normally charge.

Let's say all that is true (because I have no reason to believe you are wrong). If Nokia refused to make a reasonable deal with Apple – one that would violate anti-trust laws – shouldn't Apple have sued Nokia at that point, rather than build a device they knew required licensing to use that they didn't have? Is this "it's easier to ask forgiveness than it is to get permission"?

If Apple had built something and just failed to identify patents because they didn't research some obscure patents, I could understand. But it's obvious from the background that Apple did know and simply chose to violate the patents with the presumption they would fight that battle later – and win. I can almost see accounts/lawyers weighing that if they put the iPhone on the market and it tanks, then Nokia won't bother to sue. If the iPhone succeeds, then it will pay for its own court costs.

You linked to the general definition of RAND. There's nothing in the definition that precludes some form of "limited RAND", where the terms are only applied to a members of a specific group, and not outside of it.

In any case, every time this Nokia vs Apple topic is raised on Slashdot, I see this very same exchange about RAND. However, neither the side that claims GSM is RAND-licensed to everyone, nor the side which claims some kind of "limited RAND", have offered any definite sources. I've tried to find it on GSM Association website on my own, but wasn't successful.

Until then, both yours and GP's claims are just speculation, and the actual licensing terms for GSM specs, and how they apply to this situation, are unclear.

We could have a better system for compensating inventors. Monopoly is why the current system is so bad. More than that, the whole notion of owning an idea is toxic. It habituates our thinking. We have become accustomed to treating ideas and information as if they are material goods, of routinely overlooking the extremely important and cost saving ways they aren't. When we say "your idea", we mean that you discovered or invented it, and when we say "your car", we mean that you own it. This vital difference has become blurred. It is how people can use the term "stealing" in place of copyright infringement and be taken seriously. That you invented something should not give you absolute authority over what everyone else does that might be related. And because it is an idea, not a material object, the effect is as if you were given the power to dictate not just whether and how someone uses your car, but any car, or even any wheeled transport. Just having to find you and the thousands of others and ask everyone's permission is a huge burden, so huge that no one does it. It's impractical. No one goes patent fishing, they keep on and hope no troll pops up. Our courts have to waste time debating things that should be obvious. That is why I'd rather see the system entirely replaced, and not merely reformed. And also why I think it eventually will be. I think the most likely future is that these laws fall into disuse, as everyone shifts to better ways as they become apparent. Patents will become the kiss of death, the reason to shun an idea. I'd like to see that happen in my lifetime, but I don't think it will.

Your example is not representative. Patents are more danger than salvation. One patent, on any of the dozens of innovations that go into those 10 years of work can shut you down. Extremely difficult to get anywhere toiling away in obscurity. Big organizations have resources and expertise to work the system, hermits don't. The court system grossly favors the rich, not intentionally, but because they can afford better lawyers and other help.

What if some other inventor working on the same idea beats you to the patent office by hours, as happened to Elisha Gray? Under the current system, you are even more screwed than if there were no patents. You can't even continue to try to bring your invention to market because you'd be infringing the other guy's patent! He was granted the monopoly, and you aren't even allowed to compete, let alone enjoy freedom from competition. The other doesn't have to license to you, doesn't have to allow you anything.

Why did we even set things up this way? Of all the ways to resolve an issue, making it moot is the best, and sending it to the courts for an ugly, expensive, bitter, long, agonizing "winner take all" fight is among the worst. Even a gunfight has one advantage over the courts: it's quick. The patent system may as well be an unsupervised school yard fought over by gangs. You'd think after the umpteenth police raid, people would realize this can't be allowed to go on, and resolve to make changes.